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13d Filings

13D Filings

Aug. 30, 2014 3:13 a.m. ET

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13Ds are filed with the Securities and Exchange Commission within 10 days of an entity's attaining a greater than 5% position in any class of a company's securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from Aug. 21 through Aug. 27, 2014. Source: InsiderScore.com

Activist Filings

HG Vora Capital Management said that it recently discussed a range of issues with Town Sports and suggested specific measures to increase shareholder value, including: the freeing up of $27.3 million in cash held by Town Sports subsidiaries, a focus on improving free cash flow by reducing costs and capital expenditures, exploring an opportunity to defer $30 million in taxes related to the sale of a property in New York, and retaining advisors to consider strategic alternatives to "maximize shareholder value, including a sale of the entire company."

Vora also stated that it owns 3,875,000 shares (16% of the total voting stock) after it purchased 1,475,000 shares from June 24 to Aug. 13 at prices of $4.04 to $6.80 each. Vora also sold 25,000 shares on June 24.

In a separate filing, Farallon Capital Management disclosed that on Aug. 22 Andrew Spokes of Farallon stated in a letter that, "given the increased likelihood that interest in the company will emerge on the part of potential acquirers, the Company should be prepared to evaluate such interest, including by engaging a financial advisor to explore a range of potential responses."

Farallon also disclosed that it owns 4,060,082 shares (16.7%).

Original Filings

Blue Harbour Group disclosed that it owns 20,462,685 shares (5.7%) after it purchased 4,475,009 from July 8 to Aug. 21 at prices of $10.32 to $11.02 each. Blue Harbour said it acquired the shares because it believed that the stock represented an attractive investment opportunity. It did not disclose any specific plans or proposals.

JAT Capital Management reported it owns 4,280,865 shares (6.7%) after it purchased 1,195,700 from Aug. 12 to Aug. 22 for $60 to $64.84 each. It also sold 30,700 on Aug. 11 at $60.17 apiece. JAT did not, however, disclose specific plans or proposals.

Increases in Holdings

Lone Star Value Management raised its stake to 2,925,000 shares (8.8%) after buying 700,000 from Aug. 21 to Aug. 25 for $7.33 to $7.54 each and selling 100,250 on Aug. 25 for $7.39 to $7.52 . Lone Star also disclosed short sales of 610,000 shares from Aug. 21 to Aug. 25 at prices from $7.33 to $7.54. On April 1, SWS announced that Hilltop Holdings agreed to purchase it for $7.88 per share, a 28% premium to the pre-announcement market price.

Key Numbers: 8.48%: the percentage of common shares owned by Icahn. 1: the number of top 10 shareholders who historically support management.

Behind the Scenes: Icahn has made a lot of money for himself and shareholders by investing in good companies that needed changes to close their undervaluation gap. Hertz is a growth company that is part of an oligopoly with serious barriers to entry, such as real estate at airports, which is no longer readily available. However, the company has had recent operational issues (car recalls in 2014) and accounting issues resulting in late SEC filings. As a result, there is a large valuation gap between Hertz and its closest competitor, Avis. Many shareholders, most notably Fir Tree Partners, have lost confidence in management. Fir Tree recently called for the replacement of the CEO. (See Barron'sFollow-up on Hertz). Icahn is not one to follow the lead of other shareholders, but will have his own discussions with management and make his own decisions. Hertz is on the right track, with the recent decision to spin off its rental equipment business. Icahn's presence may be enough to reinvigorate management's focus. But if disagreements between shareholders and management develop into a proxy fight, the large concentration of hedge funds in the shareholder base is a positive factor for activists.

-- Kenneth Squire

The 13D Activist Fund, a mutual fund run by an affiliate of the author and not connected to Barron's, has no position in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.

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